The 1719 scheme is a distinct success…

The 1719 scheme is a distinct success from the government's perspective and they seek to repeat it.

Negotiations take place between Aislabie and Craggs for the government and Blunt, Cashier Knight and his assistant and Caswell.

Janssen, the Sub Governor and Deputy Governor are also consulted but negotiations remain secret from most of the company.

News from France is of fortunes being made investing in Law's bank, whose shares have risen sharply.

Money is moving around Europe, and other flotations threaten to soak up available capital (two insurance schemes in December 1719 each seek to raise three million pounds).

Plans are made for a new scheme to take over most of the unconsolidated national debt of Britain (£30,981,712) in exchange for company shares.

Annuities are valued as a lump sum necessary to produce the annual income over the original term at an assumed interest of five percent, which favors those with shorter terms still to run.

The government agrees to pay the same amount to the company for all the fixed term repayable debt as it had been paying before, but after seven years, the five percent interest rate will fall to four percent on both the new annuity debt and also that taken over previously.

After the first year, the company is to give the government three million pounds in four quarterly installments.

New stock will be created at a face value equal to the debt, but the share price is still rising and sales of the spare stock over and above that with a sale value equal to the debt will be used to raise the government fee plus a profit for the company.

The more the price rises in advance of conversion, the more the company will make.

Before the scheme, payments are costing the government one and a half million pounds per year.

In summary, the total government debt in 1719 is £50 million: £18.3m is held by three large corporations: £3.4m by the Bank of England, £3.2m by the British East India Company, £11.7m by the South Sea Company.

Privately held redeemable debt amounts to £16.5m; £15m consists of irredeemable annuities, long fixed-term annuities of seventy-two to eighty-seven years and short annuities of twenty-two years remaining maturity.

The purpose of this conversion is similar to the old one: Debt holders and annuitants might receive less return in total but a difficult to sell investment is transformed into shares which can be readily traded.

Shares backed by national debt are considered a safe investment and a convenient method to hold and move money, far easier and safer than metal coins.

The only alternative safe security, land, is much harder to sell and legally much more complex to transfer ownership.

The government receives a cash payment and lower overall interest on the debt.

Importantly, it also gains security over when the debt has to be repaid, which is not before seven years but then at its discretion.

This avoids the risk that debt might become repayable at some future point just when the government needs to borrow more, and can be forced into paying higher interest rates.

The payment to the government is to be used to buy in any debt not subscribed to the scheme, which although it helps the government also helped the company by removing possibly competing securities from the market, including large holdings by the Bank of England.

Company stock is now trading at one hundred and twenty three pounds, so the issue amounts to injecting five million pounds of new money into a booming economy just as interest rates are falling.

Gross Domestic Product (GDP) for Britain at this point is estimated as sixty-four point four million pounds.